# Consumer Demand Analysis and Estimation Applied Problems

## Week 2 - Assignment

### Consumer Call-for Analysis and Estimation Applied Problems

Please consummate the forthcoming two applied problems:

**Problem 1:**

Patricia is researching venues for a restaurant concern. She is evaluating three leading marks that she considers leading in her choice: elegancy, subsidence, and expense. The appreciate she places on each mark, however, differs according to what cast of restaurant she is going to set-on-foot. If she discloseds a restaurant in a rural area of Los Angeles, then elegancy is the most leading mark, three times as leading as subsidence, and two times as leading as expense. If she discloseds a restaurant in the Los Angeles metropolitan area, then subsidence becomes three times as leading as elegancy and two times as leading as expense. She is regarding two venues, respectively, a steak restaurant and a pizza restaurant, twain of which are expensed the corresponding. She has rated each mark on a flake of 1 to 100 for each of the two divergent casts of restaurants.

**Steak Restaurant**

**Pizza Restaurant**

**Taste****Location****Price**

80

55

65

70

80

50

Show all of your calculations and processes. Represent your reply for each topic in consummate sentences.

- Which of the two discretions should Patricia hunt if she wants to disclosed a restaurant in a rural area of Los Angeles? Calculate the whole expected gain from each restaurant discretion and assimilate. Graph is not required. Represent your reply, and pretext your calculations.
- Which of the two discretions should she eliminate if she plans to disclosed a restaurant in the Los Angeles metropolitan area? Represent your reply, and pretext your calculations.
- Which discretion should she hunt if the presumption of judgment a restaurant venue in a rural area can be reliably estimated as 0.7 and in a metropolitan area as 0.3? Represent your reasoning and pretext your calculations.
- Provide a name of a scenario in which this peel of determination betwixt two choices, installed on weighing their underlying marks, applies in the “real-world” concern enhancement. Furthermore, what are the benefits and drawbacks, if any, to this regularity of determination making?

**Problem 2:**

The call-for part for Newton’s Donuts has been estimated as follows:

Qx = -14 – 54Px + 45Py + 0.62Ax

where Qx represents thousands of donuts; Px is the expense per donut; Py is the mediocre expense per donut of other brands of donuts; and Ax represents thousands of dollars departed on advertising Newton’s Donuts. The ordinary appreciates of the stubborn variables are Ax=120, Px=0.95, and Py=0.64.

Show all of your calculations and processes. Represent your reply for each topic in consummate sentences, whenever it is requisite.

- Calculate the expense elasticity of call-for for Newton’s Donuts and represent what it resources. Represent your reply and pretext your calculations.
- Derive an countenance for the inverse call-for incurvation for Newton’s Donuts. Represent your reply and pretext your calculations.
- If the consume of supple Newton’s Donuts is fixed at $0.15 per donut, should they subjugate the expense and thereafter, hawk past donuts (stiff gain maximization is the company’s intent)?
- Should Newton’s Donuts bestow past on advertising?